Thursday, December 11, 2014

Wall Street moves in for the kill

It’s been
six years since Wall Street’s recklessness and criminal fraud caused
trillions of dollars in economic damage and nearly shattered the global
economy.

The 2008 financial crisis opened millions of
Americans’ eyes to the widespread corruption and mismanagement in the
financial industry, and built public support for stronger bank
oversight. Initial steps were taken in that direction, primarily in the
Dodd/Frank financial reform bill, and more remains to be done.

But today Wall Street is on the offensive. Banks are expanding their
political influence, fighting to roll back the measures already in place
and working to block further reforms. In our money-driven political
system, they have plenty of ammunition with which to wage their battle.

Bankers still hold powerful government positions, just as they’ve
done in the last several Republican and Democratic administrations.
“Regulatory capture” has led top banking watchdogs to claim that they
are not “cops on the beat,” when that is exactly what they’re supposed
to be. And after this year’s Republican electoral sweep, Wall Street is
moving to consolidate its wins.

This week its allies were trying to kill a Dodd/Frank provision
designed to reduce the need for future big-bank bailouts. Negotiators
seeking to avert a government shutdown had inserted a provision into the
compromise agreement which would once again allow the country’s
too-big-to-fail banks to gamble on derivatives – the exotic financial
instruments which helped precipitate the last crisis – with funds that
are insured by taxpayers.

The amendment in question, which would have repealed a measure known
as the “swaps push-out rule,” was largely written by lobbyists for
Citigroup. It was backed by Republican Rep. Jeb Hensarling, Chair of the
House Financial Services Committee. Hensarling’s Democratic
counterpart, Rep. Maxine Waters, released a statement that said in part:

“I am disgusted that in a back room deal, some members and lobbyists
for the largest banks are trying to undo a seminal component of the Wall
Street Reform Act … I’m disheartened that, by trying to pass this
repeal, this Congress is risking our homes, jobs and retirement savings
once again.”

Republicans, led by Hensarling, are the bad actors in this week’s
drama. But party lines get murky where Wall Street money is concerned.
The Citigroup amendment was originally introduced by Rep. Jim Himes, a
Democrat, and there are Democrats on both sides of this battle. As Rep.
Waters declared in her statement,
“Although Democrats enacted comprehensive oversight and changes for
our derivatives markets as part of Dodd-Frank, some are using critical
legislation that is necessary to keep our government open as an
opportunity to ram through harmful deregulation.”

But, while some Democrats are aiding Wall Street in this effort,
others are resisting it. Sen. Elizabeth Warren has blasted the idea, as
have Sens. Sherrod Brown, Jeff Merkley, and Carl Levin.

This issue is extremely important on its own merits. But it’s also a
test of Wall Street’s influence as Republicans prepare to assume control
over the Senate. Bankers have the opportunity to consolidate their
control over government to an extent we haven’t seen since 2008. The
only thing standing in their way is a phalanx of progressive leaders on
the Hill.

No wonder they and their media allies have been so vituperative and
personal toward Sen. Warren lately. They have attempted and failed,
sometimes embarrassingly, to discredit Warren for opposing the
appointment of yet another banker to a senior opposition post. That
banker, Antonio Weiss, isn’t qualified for the job he’s being offered.
He has helped corporations evade US taxes and is being offered $20
million by his Wall Street employer should he succeed in becoming a
“public servant.”

The viciousness of the attacks on Warren should be seen for what they
are: the frustrated outcries of Wall Street sycophants who saw the
financial industry’s complete political resurrection at hand, only to be
thwarted by what they perceive as the obstinacy of progressives like
Warren.

We are at a pivotal moment in the struggle to restrain the financial
industry’s toxic blend of recklessness and political influence. Bankers
have escaped criminal or financial accountability for their crimes,
despite failures and frauds on a scale so epic it’s difficult for most
of us to envision. And, although the 2008 crisis discredited the
bank-friendly ideology of deregulation, that ideology is once again
being promoted aggressively in politics and the media.

Bankers have had many political victories since their moment of
financial failure, but those victories have been incomplete — until now.
Has their hour come around at last?

If there’s one thing bankers understand, it’s timing. Wall Street
isn’t just trying to get another friend into a powerful position and win
back its taxpayer guarantees. It wants to make its own agenda appear
inevitable. It wants to crush an incipient populist resistance before it
gains more momentum. It’s moving in for the kill.
That’s why it’s so important to stop the Citigroup amendment and
block the appointment of Antonio Weiss. Both actions are more than
justified on their own merits. But the stakes are even larger than they
may initially appear. And if the banks win, everybody else loses.

Quotes

"There is beauty in truth, even if it's painful. Those who lie, twist life so that it looks tasty to the lazy, brilliant to the ignorant, and powerful to the weak. But lies only strengthen our defects. They don't teach us anything, help anything, fix anything or cure anything. Nor do they develop one's character, one's mind, one's heart or one's soul." Jose Harris

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